The challenges of solar power

In an ideal world, it would be an affordable and practical solution for new electrical generation installations in developing nations to be fueled by low-carbon sources, such as solar, wind, and hydropower.  Solar seems perfect for nations with lots of sun exposure, and no efficient way of bringing the traditional electric grid to remote locations. However, there are many unexpected challenges with solar electrification that entrepreneurs are learning about while doing business in these developing nations, including installation and maintenance, infrastructure, and financing. Installation and maintenance, in particular, is often underemphasized, but it is just as important as the other challenges that make solar-powered electrification a tricky prospect.

One major hurdle for installing solar panels is the lack of skilled workers to do the job. Customers for solar panel installations could range from hospitals requiring over 20 kilowatts of power to small villages needing less than 500 watts to power the entire village. Some training is necessary to understand the complexities of these systems. This problem is being approached in a few different ways. Some companies are hiring and training dedicated installation crews to travel around vast areas doing the work. The problem with this arrangement, though, is that traveling between job sites is inefficient, and any downtime becomes very costly for companies trying to keep dedicated crews on payroll. On the other hand, if these companies hire independent installation crews then ensuring quality standards is harder to do. Also, companies are at the whim of the rates that the independent crews set. Not to mention, in some areas there are no independent installation crews for hire. However, the United Nations Development Program (UNDP) is stepping in to help. Recently, in Mali, the UNDP paid for the training of female solar technicians to perform installation, maintenance, and service for their entire village. Not only does this solve one of the difficult problems with solar installations, but the training also provides an economic boost for the entire village. Women are now able to earn a living wage to help further support their families.

Another challenge has to do with how transactions to purchase solar panels are structured. Most solar panel installations are a one-time transaction where a customer pays for the panels, equipment and the installation. The company delivers these products, then either installs the panels themselves or hires independent installers. In these deals, it is often unclear who will pay for maintenance when the solar panels break down. Many companies have little financial capacity to bring repair technicians out to remote locations years later to service panels (aside from reputation and customer satisfaction, which some corporations are not necessarily interested in), since most are struggling to make money as it is. Customers are often not in a position to pay much extra for maintenance either since they already paid a large up-front premium for the installation. Hospitals, schools, and businesses cannot afford to continue pouring money into solar systems that unexpectedly break down after two years, when they were supposed to work for twenty years.  But if no one is able or willing to pay for maintenance, the panels go unused and wasted.

Also wasted are the high hopes and expectations of the people who purchased the products. Because solar panels can be a novel technology in remote areas, if one person in a small village has a negative experience with solar, it is likely that others in the village will dismiss it. Entrepreneurs should not rush into high-minded plans of remote rural electrification unless they can ensure a very pleasurable and positive experience, because they might spoil the market for future years. If people are skeptical of solar, then they will continue to fall back on outdated diesel generators, which need just as much maintenance and costly fuel. Not to mention, these generators perpetuate adverse climate effects by pouring CO2 into the atmosphere. For these reasons it is especially important for like-minded entrepreneurs to share successful strategies and business models to tackle the problem of remote rural electrification and maintenance.

Currently there are some success stories in the field such as Devergy, and Bboxx that have done a commendable job addressing installation and maintenance issues. Devergy operates by training dedicated workers to service a village-wide micro-grid consisting of a few solar panels. Most entire village installations are not more than one kilowatt. Devergy installs smart meters and the villagers pay for their usage via mobile money. They essentially operate like a modern utility company.

Another wonderful company, Bboxx, uses extensive tracking and monitoring on all of their products to ensure safe delivery and operation for years. These companies show that despite the financial and logistical challenges, it is possible to build installation and maintenance into a successful business model. Bboxx, like other successful companies, provide ample training to locals so that the community can be involved. With better means of sharing best practices and effective models, hopefully future solar companies operating in the developing world can avoid prior mistakes and more efficiently extend access to power to the people they are serving.

This article is published in collaboration with The Energy Collective. Publication does not imply endorsement of views by the World Economic Forum. 

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Author: Adam Hashian is the CEO of LucisLumen Corporation and it’s subsidiary Vibratricity LLC.

Westar Energy in Kansas last week joined a long list of US utility companies that foolishly believe they can stand in front of tidal waves with their hands up like traffic cops to stop the rising threat rooftop solar poses to their business models.

As US utilities tack on fees and try to charge customers with rooftop solar installations more than those without them to stem the tide, the rest of the world has already realized those punitive efforts are futile and will do little more than distract utilities and delay their inevitable demise.

Accenture Strategy in Australia recently released a report on the fate of that country’s utility companies in this fast-evolving energy environment. The report revealed, not surprisingly, that innovation is the only way forward for utility companies.

“To manage the threat of the extinction, the industry needs to act now and take a leap of faith through reinvention, convergence and innovation rather than relying on the traditional mindset of defending the status quo,” according to the Accenture report. “This approach will favor the brave, and demands exceptional leadership.”

In South Australia, grid demand for huge parts of the day are expected to drop to 0 by 2023, according to a report released last week by the Australian Energy Market Operator. Because of dramatic growth in the rooftop solar industry, the AEMO estimates there will be no demand for grid power between 11:30 a.m. and 2:30 p.m. in South Australia within the next eight years.

In this scenario, rooftop solar will account for a quarter of all electricity generation in the state. One in four home and business owners in the state already have installed at least some rooftop solar, and electricity demand in Australia has dropped more than 7 percent since 2009.

Power provider Alinta announced last week that it would shutter two of its base load coal-fired generators.

“The ‘death spiral’ is in its early stages with consumption declining and mass uptake of rooftop solar allowing customer less reliance on the grid,” according to the report. “Ironically, the industry invested in infrastructure expecting demand to rise. Instead, it has steadily fallen but the investment is still needed to be recouped through increases in electricity prices. In response to this irony, savvy consumers have harnessed solar and utilized smart meter data to take control, proactively manage their electricity use and reduce their reliance on the grid.”

“The ‘death spiral’ will kick into overdrive” once energy storage become more cost-effective and viable, enabling mass grid defection, according to the report.

With that bleak outlook, it’s no wonder utilities are trying in desperation to find a way to beat back the solar revolution. However, Australia is committed to clean energy and if utilities want to make it through, they have to innovate. That’s what the good ones are doing.

Innovative utility companies are shifting from a monopoly commodities model to a customer service and interconnection agent.

“Powershop, for example, which is owned by New Zealand’s Meridian Energy, describes itself as an online power company and provides applications to allow consumers to monitor their energy use and bills and does not lock them into contracts,” according to the Accenture report. “The company has a light footprint compared with many traditional electricity retailers, employing only 70 people. It’s an approach that has secured it around 15,000 customers to date with ambitious plans to expand.”

The report highlights that utility companies will have to quit thinking like monopolies and start thinking like businesses. They will need to brand themselves, market themselves and invest in research and development. Accenture noted that water providers in Europe had to improve their tap water product and market it to avoid losing its customer base to boutique bottled water companies.

Product research and marketing are both uncommon requirements for monopoly utilities.

But utility companies are not monopolies anymore. They have competition from rooftop solar, and that competition is coming ashore white glove raised or not.